## Horizon Robotics Speeds Ahead with HK$5.41 Billion IPO, Riding the Autonomous Driving Wave
The growing adoption of autonomous driving technology is propelling a wave of initial public offerings (IPOs) as companies strive to capitalize on this exciting market. Horizon Robotics, a prominent player in this sector, has joined the fray with a successful listing in Hong Kong, raising a substantial HK$5.41 billion (approximately $696 million). This IPO catapulted the company’s valuation to HK$53.4 billion, demonstrating investor confidence in its strong growth trajectory and robust margins.
Horizon Robotics, dedicated to equipping vehicles with advanced smart driving solutions, made its debut on the Hong Kong Stock Exchange last Thursday. The company’s shares opened 28% higher than their IPO price of HK$3.99, trading at HK$5.12 on their first day and closing at HK$4.10. This impressive market debut reflects the positive sentiment surrounding Horizon’s innovative technology and its strategic partnerships.
With a decade of experience in the rapidly evolving autonomous driving sector, Horizon Robotics boasts an impressive roster of investors, including renowned names like Hillhouse Capital and 5Y Capital. A major boost of confidence arrived last year when Volkswagen agreed to invest a combined 2.4 billion euros ($2.6 billion) in both Horizon and CARIZON, a joint venture formed between the two companies. This partnership has been instrumental in propelling Horizon’s revenue growth to triple digits in the first half of 2023, highlighting the company’s ability to contribute significantly to the Volkswagen collaboration.
The joint venture will be the primary supplier of autonomous driving technology for Volkswagen’s operations in China, a pivotal market for the automotive giant. This strategic partnership underscores Horizon Robotics’ commitment to playing a key role in shaping the future of mobility in one of the world’s largest automotive markets.
Founded in 2015, Horizon Robotics is led by Chairman and CEO Yu Kai, a prominent figure in the field of machine learning and a recognized expert in the deep learning technology used by the smart vehicle sector. The company emphasizes its pioneering role in China, becoming the first to mass produce advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles. These solutions aim to enhance safety, convenience, and comfort for drivers.
Horizon Robotics distinguishes itself from its competitors through its open and collaborative approach, which enables partners to accelerate the widespread adoption of smart driving solutions. The company’s solutions have been selected by 42 original equipment manufacturers (OEMs) for integration into 290 car models, providing customers with a diverse range of choices. This widespread adoption underlines Horizon’s position as a leading provider of autonomous driving technology.
A Market Poised for Explosive Growth
The global market for ADAS and AD technology, currently valued at 61.9 billion yuan ($8.75 billion), is expected to experience a phenomenal growth rate of nearly 50% annually over the next six years. This surge in demand is projected to propel the market to reach 1 trillion yuan by 2030. Horizon Robotics is strategically positioned to capture a significant share of this lucrative market with its comprehensive offerings of autonomous driving hardware and software, and its impressive revenue growth exceeding industry averages.
Horizon’s revenue surged by 71% in 2022, exceeding the billion-yuan threshold at 1.55 billion yuan. The company’s growth accelerated further in the first half of 2023, with revenue soaring by 152% to 935 million yuan compared to 372 million yuan in the same period a year earlier.
VW Joint Venture Drives Future Growth
The Volkswagen joint venture has contributed significantly to Horizon’s revenue, generating 352 million yuan in the first half of 2023. However, the venture’s true potential lies in its capacity to become an even more powerful engine of growth in the future. Volkswagen has designated the joint venture as its primary autonomous driving technology provider in China, a key market where the company sold 3.2 million vehicles in 2022.
Horizon Robotics’ consistent gross margin of 70% or higher since 2021 has enabled the company to boost its gross profit to 738.7 million yuan in the first half of 2023, a remarkable increase from 226.6 million yuan in the same period a year ago. Importantly, Horizon’s licensing and services business, which counts the joint venture as a major customer, is a key driver of revenue growth and boasts significantly higher margins compared to the company’s product solutions category.
A Commitment to Innovation and Growth
Horizon Robotics has consistently invested heavily in research and development (R&D), with a dedicated team of nearly 1,700 employees, representing 73% of its workforce. This commitment to innovation is evident in the company’s R&D spending, which amounted to 152% of its revenue in the first half of 2023. While this significant investment has resulted in losses, the company’s adjusted loss, excluding non-operational factors, has narrowed to 1.64 billion yuan in 2023 from 1.89 billion yuan a year earlier, indicating a positive trend as Horizon scales its operations.
As a pioneer in the autonomous driving sector, Horizon Robotics has garnered strong validation from its strategic partnership with Volkswagen. The company’s rapid growth prospects, fueled by the burgeoning autonomous driving market, are likely to continue attracting investors who are keen to capitalize on this transformative technology.
